State lawmakers are considering spending up to $9.4 million over two years to help prop up Hawai'i's ailing livestock industry.

The money would be used to subsidize up to 50 percent of feed costs for commercial milk, egg and chicken producers. After a decade of mostly declining sales during the 1990s, agriculture overall is on steady footing, thanks to the growth of specialized crops such as noni, papaya, macadamia nuts and microalgae.

However, it's a different story for livestock producers that depend on imported animal feed. Since 1999, 26 commercial livestock operations in Hawai'i have shut down — a 41 percent drop, according to a survey conducted last year by the University of Hawai'i College of Tropical Agriculture and Human Resources. During that period, the state's poultry sector has been nearly wiped out while the number of milk, egg and pork producers has fallen sharply in part because of rising feed and transportation costs.

Although Hawai'i's farm sector remains relatively small compared with the $12 billion tourism industry, agriculture plays an important role in diversifying the state economy, preserving greenbelt lands and reducing the Islands' dependence on imported food.

"We're teetering," said David Davenport, owner of the 40,000-bird Hawaiian Fresh Egg Farm in Waimea on the Big Island. Feed prices have risen $1,200 a week during the past three months alone, Davenport said. "We're just seeing record feed prices right now."

Senate Bill 1307 would create a $9.4 million program administered by the state Department of Agriculture that would provide producers with grants covering up to 50 percent of feed costs. A companion bill in the House (HB 1221) would provide less money — $7.6 million over two years — to subsidize feed costs for dairy and poultry producers.

The money, if appropriated, would equate to a fraction of the hundreds of millions in tax incentives provided to other smaller sectors of the economy such as high technology and film and TV projects, said state Sen. Clayton Hee, D-23rd (Kane'ohe-Kahuku). The feed grant program would be an important first step in salvaging Hawai'i livestock operations, Hee said.

Lawmakers this session also are considering bills that would provide tax and other incentives for agriculture.

"To stop the hemorrhaging, it's going to take more than this," Hee said. "The bill really is an expression from the Legislature that the Legislature recognizes that agriculture should play a more important role in Hawai'i.

"I hope that legislators in both houses will put their money where their mouths are and support agriculture."

The bills were proposed by the state Department of Agriculture. The agency's goal is to buy time to address other problems plaguing livestock operators, such as removing regulatory hurdles and boosting marketing efforts, said Jeri Kahana, commodities branch manager for the Department of Agriculture.

"This is a quick fix to stop the bleeding," Kahana said. "There's bigger problems, but it will give us the opportunity to look at them and work on them."

Other problems facing farmers include urban encroachment and a lack of available long-term leases on private-sector agricultural lands.

The state is focusing on feed because feed costs have soared in recent months in part because of rising corn prices created by increased demand for ethanol. Feed represents 60 percent to 70 percent of production costs for livestock operators, Kahana said.

It's not all bad news for livestock. Hawai'i's cattle operations have experienced stable or growing sales in recent years, in part because cattle operators tend to own their own land and graze cattle in open fields. From 2000 to 2005, farm-level cattle sales rose 19 percent to $22.8 million, according to the Hawai'i Agriculture Statistics Service. However, most of the state's cattle are not consumed locally. Hawai'i cattle typically are shipped to the Mainland as calves and raised and slaughtered there to avoid the cost of shipping feed to the Islands.

For other livestock producers, the picture is far less rosy. Milk production in 2006 plunged 19 percent to 6.5 million gallons. During the same period, egg production fell 14 percent to 96.9 million eggs.

Ed Boteilho, president of Clover Leaf Dairy in 'Upolu, Hawai'i, said feed cost subsidies should help stabilize the industry.

"They have to stop this hemorrhaging that's going on," he said. "This will be like a shot in the arm to help get us caught up and stabilize us.

"I'm trying the best I can to hang on."

Reach Sean Hao at shao@honoluluadvertiser.com.